Financial Literacy

Question

Determine how long it would take an investment of $10 000 to grow into $11 400 if the deposit earned 7 percent

Answer 1

Determine how long it would take an investment of $10 000 to grow into $11 400 if the deposit earned 7 percent.

Calculating the time it takes for an investment to grow to a specific amount with simple interest.

Simple Interest Formula A = P(1 + rt)

A = future value

P= the principal

r = inteest rate

i = time in years

Solve for time (t)

A = P (1 + rt)

$11,400 = $10,000 x (1 + 0.07 t)

Divide both sides by $10, 000

$11,400 = $10,000 x (1 + 0.07 t)

$10,000 $10,000

$11,400 / $10,000 = 1 + 0.07t

1.14 = 1 + 0.07t subtract 1 from both sides

0.14 = 0.07t

0.14 = 0.07 t divide by 0.07 from both sides

0.07 0.07

simplify by performing division 0.14 divided by 0.07 = 2

t = 2 (t) represent number of years

Solution:

It will take 2 years for the investment to grow to $11,400.



I hope the mathematical calculations (step by step approach) was helpful. Please let me know if you require any more assistance. If anyone in my neighborhood is interested in setting up an in-person math tutoring session. I look forward to hearing from them. Have an amazing day. Doris H.